The continuing US government shutdown has hit defence company shares after Chemring said the political standoff was hitting orders.

The company warned full year profits would be £8m lower than expected, partly due to the US problems. It said:

The full impact of the US government shutdown is not yet known but it will impact the October order intake and deliveries to the US Department of Defense in the remaining few weeks of the financial year.

On top of that the company has been hit by production and quality problems at its decoy making plant in Kilgore, Tennessee, and adverse movements in the dollar exchange rate. Chris Dyett at Investec said:

Chemring's update is a disappointment, but more widely reflects the extremely difficult conditions in the US market, which are unlikely to be fully resolved any time soon, and the shorter cycle structure of the group. We downgrade 2013 and 2014 materially and reduce our sector PE-based price target to 260p (from 340p). With share price weakness expected today, we move to hold (from add).

Chemring shares are down 59.6p at 224.8p, making it the biggest faller in the FTSE 250 index.

Fellow defence business BAE Systems is also under pressure, down 10.2p at 440.5p while aerospace and defence group Meggitt has lost 9.5p to 536.5p.

Overall the FTSE 100 has added another 45.17 points to 6475.66 on renewed hopes that the US debt ceiling problem could be resolved - with talk of a six week extension - even if the shutdown is not. Mike van Dulken, head of research at Accendo Markets, said:

Lots of positive noise about cross-party discussions and potential debt ceiling extension in Washington has seen risk appetite surge on the prospect of a resolution of the impasse that has kept the US government partially closed for nearing two full weeks. Nothing concrete but the fact they are talking is a step in the right direction compared the recent flat refusals to give any ground. Republicans finally softening, after being apportioned with more of the blame?